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Barbara Weltman

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Your Staffing Now—The Options

April 20, 2023 / By Barbara Weltman

Your Staffing Now -- The OptionsInflation and labor shortages have pushed up the cost of staffing and there’s the prospect of a recession looming. The Kenny Rogers song sums up your choices about your staff at this time—“know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run.” This sentiment is reflected in Alignable’s April 2023 Small Business Hiring Report Report which found that small business owners are cutting back on their goals for full-time, permanent hires. It also found that temp hiring surged to 25%. Given the current economic climate, where do you stand with respect to your current and future staffing? What are your options?

Determine your staffing needs

Your staffing needs are based on your current requirements for help as well as your predictions for the near term. Many small business owners expect a recession any time now, which would mean less customer demand, and less need for employees to service customers. It doesn’t make sense to bring someone on if you’ll be forced to let them go soon.

Of course, new projects—an additional location, a new product line—may necessitate that you to have more workers. Decide whether you expect to continue expansion in the face of a looming recession. This will enable to you to set your staffing needs.

Determine your options for increased staffing

If you need more help, you can consider using:

  • Full-time employees
  • Part-time employees
  • Independent contractors
  • Temporary workers

Another option is to automate some functions to eliminate the need for a worker. AI—artificial intelligence—is the buzz word now. AI can be costly upfront but can save you money in the long run. For example, you might use a chatbot for customer service to handle routine inquiries. Examine your business operations to see where AI can or should be deployed. Also look at other technology—equipment, software, etc.—that can reduce the workload and your staffing needs.

Determine your options for decreased staffing

If you want to downside your staff, perhaps the first step is to institute a hiring freeze to keep your staff at the current level. Then decide what you’ll do when an employee leaves the company—replace the employee or leave the position unfilled?

Layoffs are an option, but not the first thing to do if you experience or expect reduced business. It’s costly to replace and retrain—as much as two times an employee’s annual salary—when business ramps up. A better option is to reposition employees who have less work. Retraining (upskilling and reskilling) can help them remain with the company and provide valuable assistance. EBN refers to this as “labor hoarding.”

Understand the difference in legal terms between firing, laying off, or furloughing an employee.

  • Firing means a worker has not performed well or did something wrong. Unless termination is due to gross misconduct, the worker is eligible to collect unemployment benefits.
  • Laying off an employee does not reflect poorly on the work done; it merely means the company no longer has a need for the employee’s services. If you bring the employee back, you are rehiring this person. You can opt to give severance pay; this isn’t required by law but may be a contractual obligation for an employee with an employment contract. Again, unemployment benefits are an option for the worker.
  • Furloughing means the worker is still employed, although you do not pay wages for the period of the furlough. Employee benefits, such as group health and retirement plans, can continue. For example, the furlough period may count as credited service for purposes of vesting under a qualified retirement plan. But because the employee isn’t receiving compensation, a 401(k) contribution by the employee may not be possible. The employee can obtain unemployment benefits during the furlough period.

Final thought

Doug Conant, former president and CEO of Campbell’s Soup, said: “To win in the marketplace, you must first win in the workplace.”

Be sure you have your staffing under control.

Find more help regarding hiring your staff in this blog post.

Tags artificial intelligence (AI) automation economic climate full-time employees hiring part-time employees recession staffing needs

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